Car sharing’s watershed moment

By March 13, 2013 Car Sharing No Comments
Pic courtesy ferrytoll.org

Pic courtesy ferrytoll.org

If you’ve not been watching the North American car sharing market, you might have missed this news – I almost did. Car sharing and rent-by-the-hour pioneer Zipcar.com was acquired by Avis for $500 million in Jan 2013. The nice folks at WRI Insights put things in perspective – what does the Zipcar exit mean for the car sharing industry trend? I cherry pick some of the insights from their article.

On the virtuous cycle of car sharing…

Car sharing has made an indelible mark on how we live in cities. Membership exceeds one in five adults in many urban neighborhoods from Montreal to San Francisco. Each shared vehicle in North America has been shown to replace nine to 13 personal cars, and reduce driving by an average of 44 percent – as members pocket the savings and choose to walk, bike, and take public transit.

Zipcar’s 760k members account for nearly 50% of global car-sharing members.

Although Zipcar’s 760,000 members account impressively for nearly half of global car-sharing members, the company has never turned an annual profit since its founding in 2000. After a successful IPO in April 2011 – another watershed moment – Zipcar’s stock initially rose to $31.50, but tumbled after continued losses, closing at just $8.24 before the Avis announcement. Zipcar had only two month’s operating cash on hand as of its September 2012 close.

On the explosion of peer-to-peer car sharing services.. GetAround.com, UK-based WhipCar, RelayRides.com, Wheelz and Car2Go are some of the players in this space.

Peer-to-peer (P2P) services allow individuals to share their personal cars directly with others. Imagine convenient, hourly access to virtually every car parked on-street. Most cars sit idle 95 percent of the time. P2P allows us to access that vast unused capacity and enables car owners to earn money by driving less – a win for the environment. P2P also eliminates the huge capital required for car-sharing fleet expansion, enabling scale-up like never before.

In other news closer home, Zipcar’s Indian copycat (Zoomcar) has launched in Bangalore with its first location in Brigade Gateway (Malleswaram).

Would car sharing services (peer-to-peer or otherwise) catch on in developing countries?

Social entrepreneurs are also paving the way in Asia, Africa, and Latin America – home to 74 percent of the world’s urban population but only 4.5 percent of its car-sharing members. Cities of India and China alone are expected to add 700 million new residents by 2030, most aspiring to join the burgeoning middle class. Will these cities sprawl with polluting cars?

Instead, imagine if a family’s first car becomes the one it shares with neighbors. Imagine if car sharing can gain prevalence before ownership becomes ubiquitous. Car sharing could help cities stay compact and walkable, and establish a sustainable culture of mobility.

Here’s the link to Clayton Lane’s original article on WRI Insights – Zipcar’s purchase by Avis: Car sharing success or failure?

 

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